Today’s excerpt is from Financing Your Life. It’s taken from Chapter 2: The Secret to Financial Planning.
There is a reason that financial planning is such a delicate, time-consuming process—and a reason why so many well-meaning individuals fail when they adopt a specific system that’s designed to help them get their finances under control. The reason? Financial planning isn’t a one-size-fits-all process.
Exploring Financial Planning Options
The goal of this book is to give you a comprehensive look at all the moving parts involved in financial planning and to provide many different options for creating the perfect financial management plan to help you finance your life.
Sadly, many people assume that if they find nothing but failure with their first financial management method, the fault must be theirs. As if this one-time failure is indicative of a personal deficiency they can’t possibly overcome. This can leave them feeling insecure about their ability to manage their financial lives; it saps their power. When they no longer feel that they have power over themselves and their finances, it’s a set-up for disaster.
Instead, I want to focus on giving you the power back—in a way you’ve never had it before. Because I’m not going to tell you what you need to do—I’m going to give you options so you can choose those that work best for you.
In order for this to work, it’s important that you allow yourself the freedom to move forward with an open mind. There are many different approaches you can consider, and you may wish to try one or two before you find the arrangement that works best for you.
To attempt trial and error effectively, you must be able to embrace failure not as a death sentence for your money, but as a form of training, educating you on what works and what doesn’t. Sometimes in this failure, when you take it apart and examine it, you can see why a certain method doesn’t work for you—and that’s the most powerful lesson of all. Because when you know why something doesn’t work, you can more easily identify what will.
Ideas, Inspiration and Imagination
People often think of finance as a stuffy, bean-counting task but in truth, financial planning is an art form. From picking stocks to creating a budget, designing insurance coverage options and long-term financial preparation, every aspect of your financial planning process requires ideas, inspiration and imagination.
Think of your financial present and future as a blank canvas. Your many options for budgeting, management and planning are the brushes and paints you’ll use to decorate the canvas. Your future financial goals are the inspiration that rely on your imagination—the very thing that helps you conceptualize future events and determine the resources you’ll need to deal with them (such as retirement savings for postretirement income). When you look at it this way, you can see that all the elements come together much like any art project, which means you’re allowed the creative freedom to express yourself through your financial management techniques.
Consider the most successful investors, individuals who have made billions from their investing techniques. People like Warren Buffett, George Soros, Carl Icahn and Thomas Rowe Price, Jr. to name a few. Some are value investors, looking for underpriced stocks with an intrinsic worth that far exceeds trading price. Others focus on selling or buying futures—taking a long view of a commodity and making predictions about where prices will be in the future. Still others focus on penny stocks, technical analysis, arbitrage and so on. If these investors—and others—had accepted a one-size-fits-all approach to investing, would they have been as successful? If so, then why is every investor—from the 20-something with a new IRA to the 50-something with a 401(k)—not as successful?
Once you’ve accepted that there is no blueprint to success, no single-sized method that will put you in the same exact place as other individuals, you are free to explore your own financial creativity and apply toward developing and defining your personal concept of success.